Nissan CEO Hiroto Saikawa has had to revised full-year profit forecasts — twice.
With its ongoing battle with former Chairman Carlos Ghosn as a backdrop, Nissan’s executive team had to add to the difficulties by announcing it was tracking to miss its full-year profit goals — and even worse, it will make less than its Alliance partner, Renault.
The Japanese automaker cut its forecast for its preliminary operating profit for the second time to 318 billion yen, or $2.8 billion, for the year ended March, from 450 billion yen.
Nissan officials cited higher costs related to U.S. warranties, an “adverse operating environment” and the “impact of recent corporate issues on sales,” i.e. fallout from the problems related to Ghosn.
Sales have fallen in the wake of Ghosn’s arrest, hastening a profit decline that is at it’s lowest level since the year ended March 2010. It’s the second cut to the automaker’s operating profit forecast in two months.
(Macron, Abe discuss Japan’s investigation of Ghosn. Click Here for the story.)
The results complicates the push by Nissan – CEO Hiroto Saikawa leading the charge – to rework the Alliance with French automaker Renault. Since Ghosn’s arrest, not only has Saikawa been quick to condemn Ghosn, but also to lament the unfair structure of the 20-year partnership.
Nissan is the larger company, but Renault essentially controls the Allance with a 43% stake in Nissan. The Japanese maker holds just 15% of Renault.
Saikawa’s been critical of the arrangement suggesting Nissan, as the larger of the two entities, should be afforded more control than it currently exercises. In fact, some have suggested that Ghosn’s arrest was engineered to give Nissan a chance to rework the deal that saved the automaker from oblivion.
(Click Here to see how “plot and treason” brought Ghosn down, jailed exec says.)
Nissan reports earnings on May 14, the automaker will earn less than Renault on a dollar basis for the first time since both posted losses in 2009. Renault reported 3 billion euros, or $3.4 billion in operating profit for the latest year. When Renault first took a stake in Nissan in 1999, the French automaker was more profitable than Nissan.
The ousted leader, Ghosn, has been critical of Nissan’s management team and how they’ve run the company in his absence. He said in a recent video proclaiming his innocence, that Nissan’s current management is to blame for three profit warnings and a domestic scandal involving improper vehicle inspections since his departure as CEO in 2017, noting the performance of the current leadership is “very sickening.”
Ghosn said fears that he would bring Nissan closer to Renault sowed the seeds of treachery.
(To see more about Ghosn being rearrested on new corruption charges, Click Here.)
“There was fear that the next step of the alliance in terms of convergence and in terms of moving toward a merger, would in a certain way threaten some people or eventually threaten the autonomy of Nissan,” he said.